Do terms of trade improve export sophistication in Africa? New empirical evidence and transmission channel

Can gains from international trade allow for a modernization of the export structure in Africa? Answering this question is the main objective of this study. In other words, it is to analyze the impact of terms of trade on export sophistication. The study covers a sample of 46 African countries over the period 2002-2014. Ordinary Least Squares and System GMM estimates show that terms of trade positively affect export sophistication. The result remains robust to the inclusion of additional variables, to the use of economic complexity index as an alternative index of sophistication. Moreover, our results show that the effect differs according to the countries' production structure. Indeed, the export of oil products has no effect on sophistication while the export of goods has a weak effect on the export upgrading. In addition, exports of manufactured goods have a positive and very significant effect on export sophistication. Our analyses allow us to identify two main channels through which terms of trade are likely to influence export sophistication: the channel of productive investment and the channel of exchange rate devaluation.

Outsourcing and Productivity During Economic Crisis: Evidence from Indian Manufacturing Firms

Outsourcing as a form of production reorganisation has important implications for factor productivity. Empirical verification of this relationship for India, however, is unavailable in the recent times. To fill this gap, we measure the relationship between outsourcing and multifactor productivity for Indian firms between 2010 and 2014. We use fixed-effect panel data regression and GMM estimates to establish that outsourcing raises productivity significantly at the source. The outsourcing–productivity link has important policy implications for developing countries, such as India. Relative inflexibility of labour market institutions and slow-moving legal procedures may otherwise restrict the restructuring of firms under duress. Outsourcing-related productivity improvements might have helped to overcome such disadvantages even during the global crisis of 2008–2009. JEL: D24, L6

Trade Facilition and Economic Growth in Developing Countries: Using A Static and Dynamic Framework

Analysing the literature, it is found that empirical evidences on the link between trade facilitation and economic growth for developing countries is very scarce. The present study investigated whether trade facilitation has contributed to the economic growth of a sample of 23 developing countries over the period 2007-2014. Results from the analysis highlight the importance of trade facilitation as a crucial determinant of development. Moreover, even trade levels have demonstrated to have an important role to play in boosting growth levels. Private investment is also seen to be an important driver of growth and the importance of education, are also acknowledged by the results. The GMM estimates confirmed these results and further indicated the presence of dynamism in growth modeling. Moreover, the granger causality test shows that there is a uni directional causality flowing from trade facilitation to economic growth.